managerial accounting EXAM 1

Which of the following is an example of a factory overhead cost? a.President's salary b.Insurance premiums on salespersons' automobiles c.Repair and maintenance cost on the administrative building d.Factory heating and lighting cost

d.Factory heating and lighting cost

In which of the following cost accounting systems are perpetual inventory records maintained for materials, work-in-process, and finished goods inventories? a.Job order costing b.Batch costing c.Process costing d.Activity based costing

a.Job order costing

Which of the following statements is a difference between financial accounting and managerial accounting? a.Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP. b.Under financial accounting, reports are prepared as and when management needs them, whereas under managerial accounting, reports are prepared on a monthly basis. c.Financial accounting focuses on providing information for internal use, whereas managerial accounting focuses on providing information for external use. d.Financial accounting has a subjective approach, whereas managerial accounting has an objective approach.

a.Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP.

One of the ways in which just-in-time processing is accomplished in manufacturing and non-manufacturing processes is by: a.combining processing functions into work centers and cross-training workers to perform more than one function. b.moving a product from process to process as each function is completed. c.having workers typically perform one function on a continuous basis. d. Having production supervisors attempt to enter enough materials into manufacturing to keep all manufacturing departments operating.

a.combining processing functions into work centers and cross-training workers to perform more than one function.

Which of the following information is provided by job cost sheets? a.Managerial salary b.Cost of depreciation on office computers c.Cost impact of materials changes d.Cost of utilities

c.Cost impact of materials changes

In job order cost accounting system used by a service business, which of the following items would normally not be included as part of overhead? a.Rent b.Supplies c.Direct labor d.Materials

c.Direct labor

Which of the following items would be classified as a part of prime cost? a.Administrative cost b.Selling cost c.Direct labor cost d.Factory overhead cost

c.Direct labor cost

Which of the following items would be classified as a part of prime cost? a.Factory overhead cost b.Selling cost c.Direct labor cost d.Administrative cost

c.Direct labor cost

Which of the following would be classified as direct materials for an auto manufacturer? a.Material used for door panels b.Factory light bulbs c.Steel d.Drill bits

c.Steel

Costs are often classified by their relationship to a segment of operations, called a _____. a.controlling account b.prime cost c.cost object d.cost sheet

c.cost object

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the Materials account to: a.Finished Goods and Cost of Goods Sold. b.Work-in-Process and Factory Overhead. c.Work-in-Process and Cost of Goods Sold. d.Work-in-Process and Finished Goods.

b.Work-in-Process and Factory Overhead.

Robbson Manufacturers has estimated total factory overhead costs of $184,000 and 25,000 direct labor hours for the current fiscal year. If job number 115 incurred 1,200 direct labor hours, the work-in-process account will be increased and factory overhead will be decreased by: a.$7,022. b.$153. c.$25,000. d.$8,832.

d.$8,832. divide incurred direct labor hours by direct labor hours for the year then multiply that by total factory overhead cost (1200/25,000=.048 x 184,000 = 8832)

Heedy Winery accumulates the costs incurred in the labeling process in an activity cost pool. Costs for the labeling process are estimated to be $320,000 for the coming year, and the winery expects to generate 640,000 labels. Production for its top-selling wine is estimated at 160,000 bottles. How much overhead from the labeling process will be allocated to this particular variety of wine? a.$320,000 b.$160,000 c.$40,000 d.$80,000

d.$80,000 640,000 / 320,000 = 2 160,000 / 2 = 80,000

Compute factory overhead cost from the following costs: Depreciation on factory buildings$ 45,950 Depreciation on office equipment 32,980 Direct materials used 96,840 Indirect labor 6,580 a.$52,530 b.$78,930 c.$96,840 d.$73,000

a.$52,530 depreciation on factory building + indirect labor 45,950 + 6,580 = 52,530

The recording of the jobs shipped and customers billed would increase: a.Cost of Goods Sold. b.Accounts Payable. c.Cash. d.Finished Goods

a.Cost of Goods Sold.

Which of the following is an example of direct labor cost for an airplane manufacturer? a.Cost of wages of assembly worker b.Salary of plant supervisor c.Cost of wages of janitors d.Salary of the chairman

a.Cost of wages of assembly worker

For which of the following businesses would the job order cost system be most appropriate? a.Custom cabinet manufacturer b.Automobile manufacturer c.Lumber mill d.Meat processor

a.Custom cabinet manufacturer

Predetermined Factory Overhead Rate is calculated as: a.Estimated Total Factory Overhead Costs ÷ Estimated Activity Base. b.Estimated Total Factory Overhead Costs + Estimated Activity Base. c.Estimated Total Factory Overhead Costs × Estimated Activity Base. d.Estimated Total Factory Overhead Costs - Estimated Activity Base.

a.Estimated Total Factory Overhead Costs ÷ Estimated Activity Base.

Which of the following is true of job order cost systems? a.Job order cost systems are often used by companies that manufacture custom products for customers or batches of similar products. b.Examples of companies that use job order cost systems would be oil refineries, paper producers, chemical processors, and food processors. c.Job order cost systems are not widely used. d.Job order cost systems provide product costs for each manufacturing department or process.

a.Job order cost systems are often used by companies that manufacture custom products for customers or batches of similar products.

During the year, Bright Corporation applied factory overhead costs of $330,000 to production. At the end of the year, total overapplied factory overhead is $13,000. What was the amount of actual factory overhead cost incurred during the year? a.$300,000 b.$343,000 c.$317,000 d.$330,000

c.$317,000 330,000 - 13,000 = 317,000

During the year, Bright Corporation applied factory overhead costs of $330,000 to production. At the end of the year, total overapplied factory overhead is $13,000. What was the amount of actual factory overhead cost incurred during the year? a.$300,000 b.$330,000 c.$317,000 d.$343,000

c.$317,000 $330,000- $13,000 = $317,000

Which of the following is true of a direct materials cost? a.It is sometimes called factory burden. b.A direct materials cost is included in factory overhead. c.It is the cost of any material that is an integral part of the finished product. d.It is not a significant portion of the total product cost.

c.It is the cost of any material that is an integral part of the finished product.

Which of the following costs appear on a balance sheet? a.Period Costs b.Selling expenses c.Product Costs d.Opportunity costs

c.Product Costs

Which of the following businesses is most likely to use a job order costing system? a.A paper mill b.A company that manufactures chlorine for swimming pools c.An oil refinery d.A swimming pool installer

d.A swimming pool installer

Which of the following would be a period costs for a textbooks printing company? a.Utility costs of the factory b.Wages of a press operator c.Paper costs d.Advertising expenses

d.Advertising expenses

Which of the following is a product cost? a.Administrative cost b.Selling cost c.Opportunity cost d.Direct labor cost

d.Direct labor cost

Which of the following businesses is most likely to use process cost accounting system? a.Printing firm b.Dress designer c.Custom cabinet manufacturer d.Lumber mill

d.Lumber mill

Which of the following statements is true of managerial accounting? a.Managerial accounting is required to be reported annually, also may be reported monthly or quarterly. b.Reporting under managerial accounting is constrained by rules such as generally accepted accounting principles. c.Managerial accounting provides information to the external stakeholders of the company. d.Managerial accounting is primarily concerned with generating information for use by managers.

d.Managerial accounting is primarily concerned with generating information for use by managers.

Direct materials, work-in-process, and finished goods inventory are most likely to be reported on the balance sheet of a(n): a.apparel boutique. b.financial consultant. c.insurance company. d.automobile company.

d.automobile company.

The recording of the jobs completed would decrease: a.Work-in-Process. b.Factory Overhead. c.Cost of Goods Sold. d.Finished Goods.

a.Work-in-Process.

The finished goods account is a controlling account for the subsidiary: a.stock ledger. b.sales ledger. c.work-in-process ledger. d.materials ledger.

a.stock ledger.

Loise Inc., a manufacturing company, forecasts that total overhead for the current year will be $19,250,000, and total machine hours will be 350,000 hours. However, the actual overhead is $6,095,000, and the actual machine hours are 142,000 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, what is the predetermined overhead rate? a.$43 per machine hour b.$55 per machine hour c.$23 per machine hour d.$192 per machine hour

b.$55 per machine hour dividing the estimated manufacturing overhead by the estimated activity base. 19,250,000 / 350,000 = $55

In which of the following cost accounting systems are perpetual inventory records maintained for materials, work-in-process, and finished goods inventories? a.Activity based costing b.Job order costing c.Batch costing d.Process costing

b.Job order costing

Which of the following is a period cost? a.Wages of an assembly worker b.Sales commissions c.Power d.Depreciation on factory equipment

b.Sales commissions

For a manufacturing business, work-in-process inventories consist of inventories which have _____. a.entered the manufacturing process but not been completed b.entered and completed manufacturing process but have not been sold c.entered and completed manufacturing process and have been sold d.not yet entered the manufacturing process

a.entered the manufacturing process but not been completed

Recording direct labor costs in a job order cost accounting system: a.increases Work-in-Process and increases Wages Payable. b.increases Factory Overhead and increases Wages Payable. c.increases Finished Goods and increases Wages Payable. d.increases Factory Overhead and decreases Work-in-Process.

a.increases Work-in-Process and increases Wages Payable.

At the end of the fiscal year, if the balance in Factory Overhead is small, it would normally be: a.transferred to Cost of Goods Sold. b.transferred to Finished Goods. c.transferred to Work-in-Process. d.allocated between Work-in-Process and Finished Goods.

a.transferred to Cost of Goods Sold.

The direct labor and overhead costs of providing services to clients are accumulated in: a.work in process. b.administrative salaries expense. c.finished services expense. d.overhead.

a.work in process.

An activity-based costing system allocates factory overhead rates to products or services using: a.a single plantwide overhead rate. b.the cost of activities based on an activity rate times the number of activity-based usage quantities. c.an end-of-year allocation of costs to products or services. d.an allocation of budgeted revenues produced by a product or service.

b.the cost of activities based on an activity rate times the number of activity-based usage quantities.

Matt, Inc., a toy manufacturing company uses job order cost system. The time tickets from September jobs are summarized below. Job 100 $3,500 Job 101 $1,800 Job 102 $ 1,200 Job 103 $2,800 Factory supervision $1,700 Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $25 per direct labor hour. The direct labor rate is $30 per hour. a. Determine the total factory labor costs transferred to Work in Process and Factory Overhead for September. Costs transferred to Work in Process- 9,300 Costs transferred to Factory Overhead - 1,700 b. Determine the amount of factory overhead applied to production for September. _________

b. 7750 add all jobs together then divide by direct labor rate then multiply by overhead rate (3500+1800+1200+2800 = 9300/30 = 310 x 25=7750)

Upon completing a job, direct materials totaled $4,500; direct labor, $2,500; and factory overhead, $3,500. Units produced totaled 2,100. What is the per unit cost? a.$3 b.$5 c.$1 d.$2

b.$5 $5 (4,500 + 2,500 + 3,500)/2,100

Which of the following is most likely a period cost? a.Salary of a security guard for the factory parking lot b.Salary of telephone receptionist in the sales office c.Computer chips used by a computer manufacturer d.Depreciation on factory lunchroom furniture

b.Salary of telephone receptionist in the sales office

Increase in the Work-in-Process account occur when: a.factory overhead costs are incurred. b.direct labor is recorded from the time sheets. c.materials are received into the storeroom. d.materials are ordered.

b.direct labor is recorded from the time sheets.

Finished goods inventory includes _____. a.director's fees b.factory overhead c.advertising expenses d.telephone charges

b.factory overhead

If the cost of direct materials is not a significant portion of the total product cost, it may be classified as: a.selling and administrative costs. b.factory overhead costs. c.miscellaneous costs. d.direct labor costs.

b.factory overhead costs.

The sale of a finished good on account would: a.increase Sales Expense and decrease Finished Goods; decrease Cash and decrease Accounts Receivable. b.increase Cost of Goods Sold and decrease Finished Goods; increase Accounts Receivable and increase Sales. c.decrease Cost of Goods Sold and increase Finished Goods. d.increase Work-in-Process and decrease Finished Goods; increase Accounts Receivable and increase Sales.

b.increase Cost of Goods Sold and decrease Finished Goods; increase Accounts Receivable and increase Sales.

The document authorizing the issuance of materials from the storeroom for use in manufacturing is called: a.purchase order. b.materials requisition. c.receiving report. d.purchase requisition.

b.materials requisition.

Contia Inc. forecasts that total overhead for the current year will be $12,600,000, and total machine hours will be 300,000 hours. However, the actual overhead is $3,250,000, and the actual machine hours are 98,500 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, the overhead will be: a.overapplied by $9,350,000. b.overapplied by $887,000. c.underapplied by $9,350,000. d.underapplied by $887,000.

b.overapplied by $887,000. 12,600,000 / 300,000 = 42 42 X 98,500 = $4,137,000 4,137,000 - 3,250,000 = 887,000

Dividing estimated total factory overhead costs by estimated activity base will give the _____. a.underabsorbed factory overhead rate b.predetermined factory overhead rate c.overabsorbed factory overhead rate d.actual factory overhead rate

b.predetermined factory overhead rate

Depreciation on factory equipment is an example of a_____. a.selling cost b.product cost c.prime cost d.period cost

b.product cost

In a job order cost accounting system, the effect of the flow of direct materials into production will be: a.increase in Factory Overhead and decrease in Materials Inventory. b.increase in Materials Inventory and decrease in Work-in-Process. c.increase in Work-in-Process and decrease in Materials Inventory. d.increase in Work-in-Process and decrease in Supplies.

c.increase in Work-in-Process and decrease in Materials Inventory.

Depreciation on factory equipment is an example of a_____. a.selling cost b.period cost c.product cost d.prime cost

c.product cost

A _____ is prepared when materials that have been ordered are received and inspected. a.materials ledger b.supplier's invoice c.receiving report d.materials requisition

c.receiving report

Which of the following is an example of direct materials cost for an automobile manufacturer? a.Varnish for coating b.Cost of oil lubricants for factory machinery c.Cost of wages of assembly worker d.Cost of interior upholstery

d.Cost of interior upholstery

Which of the following is most likely to be a product cost? a.Salary of the vice president of sales b.Salary of the company receptionist c.Advertising for a particular product d.Drill bits for a drill press used in the plant assembly area

d.Drill bits for a drill press used in the plant assembly area

the recording of the factory labor costs incurred for general factory use would include a debit to: a.Wages Payable. b.Cost of Goods Sold. c.Wages Expense. d.Factory Overhead.

d.Factory Overhead.

Which of the following statements is true of a traditional production process? a.It focuses on reducing time and cost and eliminating poor quality. b.It emphasizes on continually improving the manufacturing process and product quality. c.In a traditional production process, service activities may be assigned to individual work centers, rather than to centralized service departments. d.In a traditional production process, supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes) operating.

d.In a traditional production process, supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes) operating.

Which of the following is true of just-in-time processing? a.In just-in-time processing, supervisors enter materials into manufacturing so as to keep all the manufacturing departments (processes) operating. b.In just-in-time processing, a worker typically performs only one function. c.It assigns service activities to centralized service departments. d.It is a management approach that focuses on reducing time and cost and eliminating poor quality.

d.It is a management approach that focuses on reducing time and cost and eliminating poor quality.

Which of the following is true of a direct materials cost? a.It is not a significant portion of the total product cost. b.It is sometimes called factory burden. c.A direct materials cost is included in factory overhead. d.It is the cost of any material that is an integral part of the finished product.

d.It is the cost of any material that is an integral part of the finished product.

Which of the following techniques is used by just-in-time manufacturing? a.It provides specialized training so that employees only do one task and work individually to improve efficiencies in the department. b.It encourages management to make all operating decisions regarding the manufacturing process rather than the line employees in order to streamline the process. c.It emphasizes push manufacturing. d.It organizes the plant in such a way as to reduce product movement from station to station.

d.It organizes the plant in such a way as to reduce product movement from station to station.

Which of the following is the subsidiary ledger for work-in-process? a.The materials ledger b.The finished goods ledger c.Materials requisitions d.Job cost sheets

d.Job cost sheets

Which of the following are the two main types of cost accounting systems for manufacturing operations? a.Process cost and replacement cost systems b.Job order cost and general accounting systems c.Process cost and general accounting systems d.Job order cost and process cost systems

d.Job order cost and process cost systems

The amount of time spent by each employee and the labor costs incurred for each individual job or for factory overhead are recorded on the: a.receiving order. b.in-and-out board. c.employees' earnings records. d.time tickets.

d.time tickets.